Bipartisan reps, hospitals back new bill delaying billions in DSH payment cuts to FY2026

A bipartisan group of representatives introduced legislation Tuesday that would delay billions in scheduled Medicaid disproportionate share hospital payment cuts by two years.

DSH allotments are currently slated to be reduced by $8 billion, or about 54%, annually beginning in the 2024 fiscal year that would begin Oct. 1. The Supporting Safety Net Hospitals Act (H.R. 2665) introduced by Rep. Yvette Clarke, D-New York, bumps back the cuts until the fiscal year 2026.

“Medicaid DSH payments are critical for hospitals that provide care to millions of Americans, where they serve a disproportionate number of low-income and uninsured patients,” Clarke said in a release. “The pending cuts in funding would not only strip my district of $692.5 million in essential healthcare funding, but would also deprive hospitals nationwide of more than $5 billion from Medicaid DSH funding and leave the most vulnerable Americans at risk. I’m proud to reach across the aisle to stand with my colleagues on behalf of this vital legislation.”

Other lawmakers who joined Clarke in supporting the delay were Dan Crenshaw, R-Texas, Diana DeGette, D-Colorado, and Michael Burgess, R-Texas.

The Affordable Care Act installed DSH payments cuts for hospitals providing uncompensated care, though they have never gone into effect due to congressional intervention. Whether that bipartisan tradition would continue was an open question in light of recent debt ceiling negotiations.

“Ensuring access to quality healthcare is of paramount importance to the well-being of millions of Americans, particularly those who rely on essential hospitals to receive the care they need,” Burgess said in a release. “The proposed Medicaid DSH cuts, a vestige of very poor policy included in the Affordable Care Act, pose a significant threat to the ability of these hospitals to fulfill their safety net mission. We must prevent these cuts and safeguard access to care for individuals and families in communities across the nation.”

In a March report to Congress, MacPAC said it was “concerned” that the scheduled payment cuts “may disrupt the financial viability of some safety-net hospitals.” It had previously recommended that such reductions should be phased in gradually.

“Phasing in reductions will give states time to adjust to other types of Medicaid hospital payment policies to account for DSH funding changes,” the commission wrote in its March report (PDF).

Around that same time, nine hospital groups including the American Hospital Association, America’s Essential Hospitals (AEH) and the Federation of American Hospitals petitioned congressional leadership to stave off the scheduled cuts. One of those organizations was quick to applaud the new bill.

“We thank House lawmakers for their bipartisan leadership today to protect patients, communities and our nation’s safety net with legislation … that would avert disastrous cuts to essential hospitals,” AEH President and CEO Bruce Siegel, M.D., said in a Wednesday statement. “Essential hospitals rely on DSH. Without this vital support, the average essential hospital would operate in the red. We must stop these cuts and, instead, consider ways to ensure federal safety net support reaches hospitals that care for low-income and marginalized populations.”

“Securing a delay of the severely harmful Medicaid DSH cuts scheduled to occur in October is critical to the survival of our financially struggling safety net hospitals,” Kenneth Raske, president of the Greater New York Hospital Association, said in a release. “The entire hospital community thanks Representatives Clarke, Crenshaw, DeGette and Burgess for their leadership on this vital issue.”